Tips for Investing in a Volatile Market

Posted on April 3rd, 2015 | by      

No. 1: Make Lowball Offers

It’s a time-honored investment principle: Make your money when you buy, not when you sell.

With stocks, it’s easy to make lowball orders. These are called “limit” orders, meaning you only buy when the stock hits your chosen personal target price.

Let’s say momentum investors have piled into XYZ Software Corp., causing it to double in a short amount of time. Now, it’s sold off a bit and is locked in a directionless, “sideways” market.

You want to buy the stock for the long haul: It has great financials, strong management, excellent products, and a strategically sound position in a growing market.

Suppose XYZ had a recent high of $100 and then dropped to $75. A lowball limit order of, say, $60 (a 20% discount) will protect your risk of losses and greatly boost your long-term gains.

 

Read more: http://www.nasdaq.com/article/how-to-profit-from-market-volatility-cm455237#ixzz3UbkhSBK0

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